Americas Conference Call Philippe Dréano Chairman & CEO December 13, 2012
Key Objectives & Drivers Pursuit of our strategy of value growth underpinned by: Continued value search through pricing and up-trading UniquebalanceofGlobal&Localbrands Geo-expansion reinforcements in Colombia, Peru& Dominican Republic strengthening of partnership in Chile Innovation to accelerate growth across all key markets 2
USA 3
The US consumer is responding positively to gradually improving economic conditions USA US consumer sentiment is rising sharply to the highest level in 5 years as unemployment rate is continuing to decline and GDP growth remains positive Consumer Sentiment Index 100 95 90 85 80 75 70 65 60 55 50 45 Jan 07 88.3 Oct 07 55.3 Oct 08 Oct 09 73.6 Oct 10 77.5 74.3 55.7 Oct 11 82.6 Oct 12 Unemployment Rate 10.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Oct 09 9.5% Oct 10 8.9% Oct 11 7.9% Oct 12 % Chg in GDP Qtr vs. PY 4.0 3.0 2.0 1.0 0.0-1.0-2.0-3.0-4.0-5.0-6.0-7.0-8.0-9.0 Q3 08-8.9 Q3 09 Q3 10 0.4 Q3 11 3.0 2.0 Q3 12 The Federal Reserve forecasts unemployment to stay below 8% in 2013 while economic growth will rise to 2.5-3.0% Source: U.Mich/Reuters; US Bureau of Labor Statistics; US Bureau of Economic Analysis, Federal Reserve September forecast 4
PR USA leveraging pricing opportunities ahead of the industry USA Spirits value growth is accelerating ahead of volume trends PR USA s price mix is growing ahead of CPI and total spirits market value growth volume growth price mix Consumer Price Index Total Spirits +5.1% PR USA +4.3% +4.6% 4.0% 3.5% 3.0% 3.1% +2.7% +1.6% +2.4% +2.2% +2.8% +2.3% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2.5% 2.2% -0.5% -1.0% -1.5% -2.0% 52 wks 13 wks 4 wks Apr 11 Oct 11 Apr 12 Oct 12 Source: Consumer Price Index, Nielsen XAOC + Liq-Wash through 10 November 2012 5
On-premise recovery is confirmed USA Off-premise sales are growing while On-premise is experiencing an even bigger rebound % Chg. $ Sales vs. Prior Year (Rolling 12 (Months) 2.8 2.3 4.0 4.3 % Chg. $ Sales vs. Prior Year (Rolling 12 (Months) 1.0 5.3 7.3 Aug 09 Aug 10 Aug 11 Aug 12 0.0 Aug 09 Aug 10 Aug 11 Aug 12 Source: US Bureau of Labor Statistics Industry Statistics based on Industry reported sales for Off Premise (Beer Wine & Liquor Stores) and On Premise (Full Service Restaurants and Drinking Places including Bars, Taverns and Nightclubs) 6
Good response to price increases USA Value growth Price mix JAMESON original 750 * +28.6% +1.9 pts CHIVAS 12Yo 750 * = +1.8 pts TGL 12Yo 750 * +6.4% +3.1 pts Source: Nielsen XAOC + Liquor + Food excl. WA, 26 weeks ending 10 November 2012 * National data 7
combined with innovation initiatives USA 8
generating solid growth for our key brands USA We are performing favorably vs. most competitors thanks to the dynamism of our key brands Nielsen $ growth 26 weeks end 10 Nov. 2012 Total XAOC+Liquor-Wash Food +4.7% +1.6% PR USA Competitor #1 +3.5% +26.0% +2.0% +12.2% +7.5% Absolut Jameson Chivas Regal The Glenlivet Malibu NABCA vol growth R6 ending October +2.7% +0.8% PR USA Competitor #1 +5.0% +25.2% +7.5% +10.2% Absolut Jameson Chivas Regal The Glenlivet Malibu +1.3% Source: Nielsen XAOC + Liq-Wash through 10 November 2012, NABCA 6 months ending October 9
Favorable outlook for 2012 consumer Holiday spending USA The National Retail Federation is forecasting +4.1% growth in holiday sales, to $586B Beverage Alcohol will benefit from growth in holiday spending Categories consumers plan to shop this holiday season Gift Cards 93% Clothing 75% Electronics 60% DVDs/Video Games 30% Personal Care 30% Food and Wine 20% Jewelry 18% Home Décor 10% Books 5% Source: National Retail Federation, Forbes magazine 10
PR USA well-positioned to continue to benefit from on-going trade-up towards premium products USA Premium-plus spirits are significantly outperforming the market and PRUSA s portfolio is strongly skewed towards Premium + brands Latest 52 Weeks ending 10 Nov. 2012 Ultra Premium Super Premium 7% 11% 4% 12% Segment $ Share (%) Share Pt. Chg. Chg. Vs. YAGO (%) Premium 30% 59% Ultra Premium 7.0% 0.0% 4.4% Super Premium 10.9% 0.3% 7.7% Premium 30.5% 0.9% 7.5% Standard 30.5% -0.1% 4.2% Value 21.2% -1.2% -1.0% Total Spirits 100.0% 4.4% Standard 31% Value 21% Total Spirits 22% 3% Pernod Ricard USA Average RSP for PR USA is 26% higher than the average within spirits 1 Source: Nielsen XAOC + Liquor WA Food $ Value; Ultra Premium ($41+), Super Premium ($26 - $40.99), Premium ($16 - $25.99), Standard ($10 - $15.99), Value (<$10) (1) Based on latest 52 weeks Nielsen ending 10 November 2012 11
BRAZIL 12
Economic perspectives remain solid Brazil Solid and stable economy Boost in investments Annual inflation (%) 06 07 08 09 10 11 12E 13F 14F 15F Government investment (R$B 2009) 3.1 4.5 5.9 4.3 5.9 6.5 5.5 6.1 6.2 5.6 474 553 637 526 643 +10% 739 844 1,103 973 06 07 08 09 10 11 12E 13F 14F 15F 06 07 08 09 10 11 12 13 14 0 Real GDP growth (1.7% in 2012) forecasted at 3.5% in 2013 Controlled inflation expected to decline Unemployment (now at about 6%) has been falling since 2006 Government expected to drive boost in investment to 21.5% in 2014 vs. 18.5% in 2010 Measures amplified by upcoming Soccer World Cup & Olympic Games Source: IBGE 13
supported by strong demographics Brazil Steady growth in population Very young pyramid Strong growth in A/B Class 1% CAGR 2000-12 60% of population <34y Population in millions 194 192 191 170 2000 2010 2011 2012 50+ 20% 35-49 21% 25-34 17% 18-24 12% 0-17 29% 58% 8 6 4 2 0-2 AB Class to grow 50% from 2009-2014 14
Spirits market growth driven by Vodka & Whisky Brazil The Spirits Industry will continue growing Growth to be driven mainly by Premium + segments in Vodka & Whisky categories Projected Spirits Industry Growth (Volume, FY 08/09 = 100) Vol CAGR 2012-16 (%) Premium vodka 21 CAGR Super Premium vodka 41 +3.8% Premium whisky 10 100 114 132 Super Premium whisky Ultra Premium whisky Standard whisky 8 13 15 Standard vodka Value vodka 4 5 09/10 12/13 15/16 Rum Brandy Value whisky -2-3 -1 1. Spirits Industry, excluding Cachaca Source: Pernod Ricard estimates 15
The high-end of the market will also benefit from the fast growing demand for Luxury Goods Brazil Luxury Brand Revenue X2 in past 2 years Arrival of more international luxury brands & distribution expansion Luxury market in Brazil - USD Bi 15 10 5 3.9 5.0 5.9 6.2 8.9 11.9 Expansion of luxury Shopping Malls 0 2006 2007 2008 2009 2010 2011 Source: GFK Luxury 2012 ~80 luxury companies evaluated 16
Our strategic brands are showing value growth ahead of volume with strong sell-out Brazil FY12 price mix* FY13 Sell-out (Aug/Sept) Volume vs. month LY Volume R12 Absolut Chivas Ballantine s +11pts +14pts +13pts Absolut +107% +91% Chivas +8% +32% Ballantine s +23% +14% Shipments lagging due to technical effects * Growth of Net Sales ahead of Volume shipments Source: Nielsen Retail Index Report August/September 2012 - Total Brazil Duty Paid 17
Innovation starts playing a key role Brazil ABSOLUT Unique -End of Year Edition Orloff Bold - New Flavours Passport Art Edition 2012 Chivas Night Magnum 18
MEXICO 19
Full Company re-engineering Mexico Reshaped portfolio & new brand strategies New Route to Market organization & commercial policy Exit of Beam brands with phasing out of small local brands Focus on key brands Repositioning of strategic brands (Absolut, Chivas Regal, Ballantine s) based on clear consumer propositions Tap into emerging middle-class pool with standard brands (e.g. Passport) Restructuring of Sales Force with customer and channel specializations Implementation of new commercial policy (trading terms) aligned with high value strategy (vs. volumes) 20
together with strong increase of average RSP of strategic brands Mexico Absolut Original % Chg +20% Chivas Regal 12 % Chg +39% 202 207 446 481 172 345 Jun-11 Dec-11 Nov-12 Jun-11 Dec-11 Nov-12 Average price 75cl in MXN - SSS Channel (Supermarkets); Source: AC Nielsen Scantrack 21
driving Value delivery Mexico The new strategy is delivering encouraging initial results Net Sales/case: +18% vs. LY in Q1 across whole portfolio Positive consumer demand evolution on strategic brands (AC Nielsen 4 weeks ending 04 Nov. 2012): Absolut +16.4% Chivas Regal +1.5% which combined with the favorable effect of company restructuring should lead to EBIT& Operating Margin improvements over time 22
TRAVEL RETAIL Travel Retail launches 23
New launches Travel Retail A luxurious shop-window for our brands contributing to build consumer demand Absolut Elyx First Class execution in 47 airports in July 2012 Chivas Brothers Blend An exclusive Ultra Smooth new product for Duty Free Rolled out in 42 airports in October 2012 24
GEO-EXPANSION 25
Expansion of our regional footprint Geo-expansion We have identified promising markets where we have significantly reinforced our human and financial means, targeting sustained double-digit growth ReinforcementofourlocalpresenceinPeru(Top14>100kcs) Investment doubled in Dominican Republic(Chivas >100kcs) Salesorganizationx3inColombiaoverthelast3years 26
In conclusion PR Americas well positioned to continue raising its contribution in value growth to Pernod Ricard Leading positions in key high growth markets Disciplined focus on value growth Strong drive of product innovation Proven Pernod Ricard business model of strong local brands ensuring critical mass to fuel prioritized investment on imported brands Continuous improvement of Route-to-Market to adapt to fast changing environment 27